Over the last few years as the price of fuel increased, transportation costs went up in the form of fuel surcharges and extra taxes. It makes sense that shipping costs should go down as the price of fuel declines. However, in the logistics business, that may not be the case.
The Price of Oil Against the Price of Gas at the Pump
Over the last few months, the price of oil has seen a 30 percent decline. Experts say this is a result of U.S. oil production combined with a lag in the global demand. And yet, that drop in price has not been seen at the pump in the United States. While prices have dropped for diesel fuel, it is been a moderate five to seven percent decline in most places. In the northeast, the decline is larger but that is because prices were already higher to begin with. Natural gas prices are up by around 20 percent because there is a greater demand.
What Does This Mean for Shipping Companies?
Even though fuel prices are declining, trucking rates may climb or at the very least stay fairly steady. The reason for this is simply supply and demand. Regulations to the trucking industry are reducing productivity and the driver workforce. The numbers of trucks available for transport is going down, while the demand for transportation is going up.
Solutions to Maintain Costs
Shippers who take advantage of collaboration between different methods of transportation offer the best service and capacity for their clients. The challenge, as it has always been, is finding the best solution for you, while managing costs and the impact on the environment. Your shipping company needs to be flexible and look for the best solutions for you.
The logistics industry is very competitive. Negotiate with your shipper to get the best service and rates so that you always know where your product is and control your own costs. A company that provides the service your customers expect is a bargain when you are not concerned about your product getting to its destination on time.
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